Insurers Duck Claims of Giving Quest a Monopoly

(CN) – Several medical labs cannot pursue claims that a competitor conspired with three health insurers to corner the market on diagnostic testing, a federal judge ruled. Rheumatology Diagnostics Laboratory had been the lead plaintiff in a November 2012 complaint against Blue Shield of California Life & Health Insurance, Blue Cross and Blue Shield Association, Aetna, and Quest Diagnostics. The action alleged a conspiracy of licensing agreements that made it impossible for independent laboratories such as those that the plaintiffs run to obtain in-network status with each insurance plan licensed by Blue Cross, known as a Blue Plan. Without such status, all the specimen-drawing business in California allegedly goes to the only two in-network laboratories for all Blue Plans, the largest of which is Quest. The labs also accused the defendants of eliminating or excluding plaintiffs from the five major diagnostic markets, including Routine Clinical lab testing, Anatomic Pathology testing, Specialty Rheumatologic testing, Advanced Lipid testing and Specialty Breast Pathology testing. Quest additionally faced allegations of predatory pricing practices, getting physicians to agree to contracts on a “loss leader” capitated bases. It is a fixed price charged by Quest for all lab tests, per patient, on a monthly basis, according to the complaint. By discounting the capitated rates, Quest allegedly excludes competition from the lab-testing markets, leaving to Quest rake in Medicare, Medi-Cal and other “pull-through” business that is charged on a fee-for-service basis. U.S. District Judge Jon Tigar in San Francisco used a broad stroke to the complaint in its entirety last week, saying the allegations “fall short” of stating a claim. “Because the attempted monopolization and monopolization claims cannot be sustained, a claim for conspiracy to violate section two necessarily fails,” Tigar wrote. “Second, although plaintiffs adequately allege that Aetna and BSC each entered into agreements with Quest, nothing in the complaint or in plaintiffs’ opposition attempts to allege a specific intent to monopolize on the part of the insurers. Third, because plaintiffs have failed to allege anticompetitive effects arising out of the agreements between insurers and Quest, their section two conspiracy claims, which necessarily require a showing of anticompetitive conduct and market power, must fail.” The plaintiff labs have until Aug. 25 to file an amended complaint.